SAP Learnings - #10

Dear All,

?Let's continue the discussion around material movements.

?Today we will see 641 movement in SAP which is meant for Material in transit.

A little background to material in transit before getting into the risks associated with it.

Whenever stock needs to be transferred from one plant to another , stock transfer order (STO) has to be created in SAP. Issuing plant passes the entry with the help of 641 movement. When 641 movement is passed, system automatically creates two entries, one in positive against the receiving plant and negative in the issuing plant. This is to reflect the stock as material in transit.? The receiving plant once material is received must pass GRN entry (101 movement) just like normal receipt entry against the stock transfer order.

What could be the possible risk?

Two potential risks or concerns I can envision regarding materials in transit are provided below:

1. Pricing difference between two plants leading to stock cost directly hitting P/L on transfer instead of getting expensed off during consumption.?

Sounds confusing?

?Materials are priced either at standard cost or moving average cost in the material master. For example, let us consider the issuing plant to be ABC and receiving plant to be XYZ. When a 641 movement is passed, quantity is entered by ABC. Value of such material is arrived using the rates from the ABC’s material master. When the same movement is reflected in XYZ, the material rate configured in the XYZ’s material master displays the value of the stock against the quantity entered by ABC. Differences in rate configuration will lead to different valuations of stock. In other words, 641 debit and credit should match. If receiving plant has valued the material at 0 and issuing plant has valued the material at Rs.100, then Rs.100 will be expensed off without consumption.

2. Long pending material in transit and GRN not being passed by receiving plant.

How can an auditor verify this?

1. Verify the total of debit and credits of 641 movements. It should be zero or there can be a marginal difference. Exceptions needs to be analysed with the help of Material master report (MM60) for pricing difference.
2. 641 movements against which GRN has not been passed by receiving plant can be displayed using the T-code MB5T. Screenshot attached below.

Thanks for reading!

That's it for today.

Until next time,

?Balaji M?